Book Extract : The Cat is Out of the Bag

Andimuthu Raja’s book on 2G scam is indeed a revelation. However, it’s an exposure in the form of omissions. It has indeed opened a new Pandora’s Box on the `176,000-crore scandal. But it also hides more than it discloses. The book, for instance, delves into details of the pulls and pressures exerted by COAI (controlled by Sunil Mittal), the powerful lobbying arm of the private cellular operators, to influence, twist and manipulate the country’s telecom policy. But it doesn’t describe the overarching role played by a Mumbai-based business house, which has played several hands to deal the right cards to decide the winners in the games to appoint key civil servants and ministers in the telecom ministry. A reader gets no idea of the roles played by crucial civil servants such as Nripendra Misra, former Telecom Secretary, Pulok Chatterjee and TK Nair, ex-officials in the PMO, and Omita Paul, who was the right hand of the former President, Pranab Mukherjee. But the book makes it clear, and is categorical, that the loud, vociferous drumming by Vinod Rai, the former CAG, who opened up the first Pandora’s Box on the 2G scam, was orchestrated, directed and choreographed by the all-powerful Cabinet Ministers, P Chidambaram (Finance and Home) and Mukherjee (Finance). Excerpts from book, 2G Saga Unfolds:

Andimuthu Raja’s book on 2G scam is indeed a revelation. However, it’s an exposure in the form of omissions. It has indeed opened a new Pandora’s Box on the Rs. 176,000-crore scandal. But it also hides more than it discloses. The book, for instance, delves into details of the pulls and pressures exerted by COAI (controlled by Sunil Mittal), the powerful lobbying arm of the private cellular operators, to influence, twist and manipulate the country’s telecom policy. But it doesn’t describe the overarching role played by a Mumbai-based business house, which has played several hands to deal the right cards to decide the winners in the games to appoint key civil servants and ministers in the telecom ministry. A reader gets no idea of the roles played by crucial civil servants such as Nripendra Misra, former Telecom Secretary, Pulok Chatterjee and TK Nair, ex-officials in the PMO, and Omita Paul, who was the right hand of the former President, Pranab Mukherjee. But the book makes it clear, and is categorical, that the loud, vociferous drumming by Vinod Rai, the former CAG, who opened up the first Pandora’s Box on the 2G scam, was orchestrated, directed and choreographed by the all-powerful Cabinet Ministers, P Chidambaram (Finance and Home) and Mukherjee (Finance). Excerpts from book, 2G Saga Unfolds:

IN May 2007, upon the resignation of Dayanidhi Maran, I was asked by my party leadership to take charge of the Ministry of Communications and Information Technology (MoCIT). MoCIT comprises three major departments viz. Telecom, Information Technology and Department of Posts. Let me first highlight some of my initiatives and achievements in the Departments of Posts and Information Technology. Roughly 12,000 post-offices around the country were fully computerized. When Jyotiraditya Scindia joined the Ministry as Minister of State, we took efforts to identify and modernize more than 500 Post-offices to wear a new look and offer better services through computerization under the scheme “Project Arrow”. I also take pride in the fact that we released commemorative stamps honouring eminent personalities from several fields including the release in Chennai, on 17 September 2007 of stamps honouring Dr. C. Natesan, Dr. T.M. Nair and Sir Pitty Thiyagarayar, great heroes of the Dravidian Movement. It was at the behest of Kalaignar Karunanidhi (the then CM of Tamil Nadu) that Tamil was finally officially declared as a classical language by the Central Government even though Tamil had already been hailed by linguistic scholars as one of the great classical languages of the world, alongside Latin, Greek, Hebrew, Chinese and Sanskrit. A moment of great privilege and honour for me was to release a special commemorative stamp into the hands of Kalaignar at the Classical Tamil Conference in Coimbatore. I also dutifully led the initiative to introduce the National e-Governance Programme under the aegis of the Department of Information and Technology which was also inaugurated by Kalaignar at a function in Chennai.

The first and foremost duty of a Minister is to familiarise himself with the administrative structure, policies and goals of the Ministry. Accordingly starting from the day after taking charge, I had the Ministry officials brief me in detail. My background in Maths, the Sciences and Law as well as my prior experience in several ministries reduced my startup time to function effectively in the Telecom Ministry. Additionally, Sreedhara, the Additional Secretary who was also the Member (Technology) in the ministry helped me extensively in learning curve. I spent a lot of time carefully studying the National Telecom Policy 1994 and 1999 (NTP-94, NTP-99), Unified Access Service License (UASL) Guidelines 2005, Indian Telegraph Act, Indian Wireless Telegraph Act, recommendations from Telecom Regulatory Authority of India (TRAI) and related Cabinet decisions. Very soon, Sreedhara was impressed with my ability to respond during Question Hour and would ask how I was managing to convey more information than had been provided to me by my staff. I explained to him that a Minister needs to know the objectives behind the Ministry’s charter and policies; only then is it possible to extrapolate from provided information, take a holistic approach and make sensible decisions. I established strategic goals for the ministry to empower people in the lowest rungs of our socio-economic ladder with Telecom and IT facilities akin to what is available in developed countries. I announced this in media interviews, which were widely published in newspapers.

The Department of Telecommunications (DoT) under the MoCIT, is the custodian of wireless spectrum. Spectrum is a Radio Frequency or Electronic Magnetic Wave band, used as the medium for specifically manufactured electronic devices to implement wireless communication. It is a finite natural resource that cannot be increased. However, its usage does not cause it to be depleted or exhausted; hence there is no extinction factor as in the case of other natural resources like Iron, Petroleum, Coal, etc. The International Telecom Union (ITU) has the responsibility to classify the bands of wireless spectrum for various types of usage, by ascertaining the technology that would best suit the band. For instance, the police department of every state is specifically assigned 700 MHz spectrum. Accordingly, wireless equipment for Wireless Radio, Cell Phones, TV and Radar devices are also manufactured exclusively for relevant spectrum band specification. The Wireless Planning and Coordination (WPC) Wing of the DoT was created in 1952 based on the Indian Wireless Telegraph Act 1933. WPC is the national nodal radio regulatory agency of the government responsible for planning, regulating and managing the limited sources of Radio Frequency (RF) transmission and associated satellite resources. All information about the spectrum classified in a particular band and the extent of allocation to service providers or to the Defence department is governed by WPC. 2G alludes to second-generation wireless telephone technology which came into commercial use from 1991. Radio signals on 2G networks are digital compared to analogue in all prior networks. 2G’s primary benefits are digital encryption of communication; significantly higher efficiency of spectrum utilization enabling greater penetration; and provision for data services like SMS, MMS and internet.

Although 3G and 4G have also become available now, 2G networks — along with related advancements 2.5G (GPRS) and 2.75G (EDGE) — are still in use in most parts of the world even as some developed countries are in the process of shutting down 2G and repurposing that spectrum. Clearly in our nation’s scenario where connectivity for the masses — especially in the rural hinterland — has been so lagging, 2G must be considered a basic infrastructural requirement akin to roads or railway lines that should be broadly available to the common man. The fundamental flaw in all evaluations of the 2G saga is omission of this principle. The ability to interconnect our country’s vast population is essential for enriching the quality of life and for enabling social inclusion of the poorer sections of our society. If the government focused solely on profit in this context, then those purely financial gains would come at a heavy societal cost.

In 2001, licenses for basic telephone services using Wireless in Local Loop (WLL) were issued — notably, this was the first time that first-come-first-served (FCFS) process of issuing licenses was adopted. Additionally, bids for a fourth cellular operator …were invited in Jan 2001

THE licensing framework has been an integral part of India’s telecommunication law. The Indian Telegraph Act of 1885 empowers the government to grant license to any person to establish, maintain or use a telegraph. However, until the early 1990s the government maintained complete monopoly in the provision of telecom facilities. In 1991, the government first allowed private telecom companies to manufacture telecom switches for telephone exchanges and then in 1992 DoT invited bids for licenses for cellular service across the four metros — Bombay, Delhi, Calcutta and Madras. In 1994, a broader perspective was adopted in order to increase teledensity by expanding private sector participation. The National Telecom Policy (NTP 1994) was thus established detailing criteria for private sector participation as well as a roadmap for the future of Indian telecom with key objectives like making telephone connections available on demand, the provision of world-class services at reasonable prices, wider geographic penetration and adoption of telecom facilities, etc. A very significant aspect was the inclusion of foreign direct investments (FDI) — in fact this was a mandatory condition for a corporation’s eligibility — as it was obvious that the Indian telecom operators did not yet possess the requisite technical or financial wherewithal. This drove the need for a regulatory body and accordingly Telecom Regulatory Authority of India (TRAI) was established on 20 February 1997 by an act of parliament. TRAI’s objective is to implement a transparent policy environment that would foster quick and sustainable growth of the telecom sector. TRAI regularly issues orders and recommendations on subjects like tariff, interconnections, “Direct to Home” (DTH) services and mobile number portability. In 2000, the Telecom Disputes Settlement Appellate Tribunal (TDSAT) was constituted through an amendment of the 1997 TRAI Act. The primary objective of TDSAT is to strengthen the regulatory framework by freeing TRAI of adjudicatory and dispute settlement functions. Any dispute involving parties like licensor, licensee, service provider and consumers are arbitrated and resolved by TDSAT.

In 1992, two operators were licensed for each of the four metros. In 1995, 21 regions divided into 3 circles (A, B, C) on the basis of revenue generation potential were defined for licensing outside of the 4 metros:

Based on an auction, two licenses were awarded in each circle in order to avoid monopoly of any single service provider in a circle. Fostering healthy competition in order to deliver better value to the public has always remained a guiding principle in India’s Telecom policy framework. A total of 34 licenses were issued for a ten-year term. The licensees had to pay an annual license fee which was agreed during the auction. There was no spectrum allocation built-in, hence the government levied additional charges for spectrum usage. The tariffs fixed by DoT were the same as for the metro licenses which at that time of low teledensity especially in the non-metro circles were bound to be untenable. Consequently, by 1998, six of the service providers defaulted on their service fee obligations. TRAI studied this in 1999 and reported the following reasons for the financial failure of the telecom operators:

Heavy capital investment for setting up infrastructure, which remained underutilized

Actual number of subscribers was much lower than projected

The average revenue per user (ARPU) was lower than the operator’s costs

Significant finances of the operators were needed to pay the license fees and operational charges

THIS financial failure and TRAI’s findings directly led to the formulation of NTP-99 which allowed migration of the licensees from a Fixed License Fee Regime to a Revenue Arrangement Scheme (with effect from 1 August 1999). Under the new scheme the license fee was a proportional tax (set at 15%) on the service provider’s revenue. The operators also had to pay a spectrum usage charge. Alongside this, the government introduced itself as a third operator in each circle.

In 2001, licenses for basic telephone services using Wireless in Local Loop (WLL) were issued — notably, this was the first time that first-come-first-served (FCFS) process of issuing licenses was adopted. Additionally, bids for a fourth cellular operator—beyond the three already in play—were invited in Jan 2001. The auction carried out in 3 stages issued licenses at 17% fee on revenue in addition to an entry fee. In September 2003, PM Atal Bihari Vajpayee constituted an empowered group of ministers (GoM) on telecom issues. Their recommendations were approved by the union cabinet in October 2003 and became an addendum to NTP-99. This led to the introduction of the Unified Access Service Licensing (UASL) regime. UASL “permitted an access service provider to offer both fixed and/or mobile services under the same license, using any technology.” A GoM was also constituted to recommend an efficient pricing formula for spectrum and for the freeing up of spectrum by the ministry of defence. The country was divided into 23 service areas, 19 telecom circles and 4 metro circles under UASL. The license fees were two-fold: migration fee, equal to the amount paid by the fourth licensee in 2001, for conversion from the legacy Cellular Mobile Telephone Service (CMTS) license to UASL; annual usage fee, 10%, 8% and 6% of adjusted gross revenue for circles A, B and C, respectively. A telecom licensee is eligible for 4.4 MHz of spectrum. When Pramod Mahajan was Telecom Minister, this allocation was raised to 6.2 MHz in 2001, the base allocation till the end of my tenure.

2G SAGA UNFOLDS

By A RAJA

Institutional governance is the bedrock of Indian policy making and enforcement under our fundamental constitutional tenet of ‘we the people’. Such governance relies on harmonious administrative protocols with amicable adherence amongst all the stake-holders. The 2G issue, as it was investigated, audited, charged and adjudicated by the various statutory and constitutional bodies (CVC, CAG, CBI and the Supreme Court) flouted these precepts of harmony and amicableness. The aberrant process resulted in the violation not only of democratic values but also the rights and reputations of various individuals thus tarnishing our country’s image on the international stage. It was an attempt to allege guilt of ‘corruption’ as defined by Transparency International (TI) i.e. “Manipulation of policies in the allocation of resources.” Yet, A Raja had established that their findings and observations were diametrically opposite to the decisions of the Cabinet, Parliament, Planning Commission and Telecom Regulator (TRAI).

The purpose of this book is to caution the masses that personal motivations, institutional incompetency, misunderstanding or misguidance should not hurriedly endorsed without diligent inspection. Government bodies are accountable to—and empowered by the people—and in the end “all power is trust.” The author demonstrates here that the ‘2G scam’ is a shameful blemish on the sanctity of the administrative system of our country.NARENDRA KUMAR

In spite of all these attempts to fillip the Telecom Sector, at that time in 2007 when I stepped in, the overall mobile phone consumer base was just 23.4 crores; the call rate was almost Z1 per minute; and there were a mere 7 telecom providers in the country. I recalled the abysmal state of telecommunication in and around my native place and was convinced that although progress had been made and market-friendly policy changes had been rolled-out there was a long way to go before the common man in India had viable and reliable means of being connected. I decided to grab the bull by the horns and promptly convened a review meeting of the Telecom Department with the aim of getting to know the number of service providers/operators using 2G Technology and the quantum of spectrum allotted to them in proportion to the total spectrum available. The ministry officials probably did not expect this level of investigation from me so quickly and I could sense their hesitation and perplexity in responding to my queries. I was very disappointed with their replies. In all my prior roles, I had no need to compete with anyone personally in order to deliver on my duties and initiatives. However, in the DoT my efforts were met with resistance and animosity from some sections. It was becoming clear to me, while the general public, government institutions and the Judiciary remained oblivious, that resources under the purview of the Telecom Ministry were being selectively almost gifted away and that there appeared to be a nexus involving 4 or 5 Telecom companies. These Telco’s lobbied and influenced ministry officials to render policy decisions in their favour, get requisite government approvals and consequently reap huge profits. Even though there was no clause in the existing license agreements mandating increase of spectrum allocation from the base 4.4 MHz, the allotment was raised by 1.8 MHz in the first stage (in 2001) and then gradually again by 2 MHz – that too without any upfront fees — on the basis of subscriber volume (subscriber base) until it reached 10-12 MHz in most cases.

THE exact quantum of 2G spectrum remaining unallocated was never disclosed in the past by the DoT officials. The reason cited for this was that the availability of spectrum can be identified periodically only through extensive coordination — between various wings of the DoT including the Telecom Engineering Centre (TEC) —and collating the fragmented information. Instead of taking up this activity at one go, the officers learnt the trick of ‘discovering’ unallocated spectrum through ‘coordination’ only at times when some existing provider expressed the need for additional spectrum. I was amazed that my predecessors in the ministry permitted this. This tracking and documentation of available spectrum is not a big technical or logistical challenge that would take years to complete. Once I issued stern instructions to the staff, information of the availability of around 35-40 MHz of unallocated spectrum came to the open in Nov 2007. All those financial wizards who made so much noise of the (apparently) big loss to the government in the spectrum allocation, never bothered to take account of the real loss — not only financial but also in terms of service penetration (teledensity) — when so much available spectrum was being kept hidden. In fact, on 11 January 2006, then Telecom Minister Dayanidhi Maran had observed in a letter to the PM: “The one major bottleneck is the availability, not allocation of spectrum for Telecommunication services and particularly thereafter vacation of Spectrum occupied by the Defence Services. It is therefore necessary that the proposed GoM should focus its attention on this aspect of vacation of spectrum by the Defence.” This shows that information about the availability of spectrum might have been hidden even from the Telecom Minister at that time forcing him to seek this intervention for repurposing spectrum from the defence department.

All those financial wizards who made so much noise of the (apparently) big loss to the government in the spectrum allocation, never bothered to take account of the real loss — not only financial but also in terms of service penetration (teledensity) — when so much available spectrum was being kept hidden.

Telecom companies like Airtel, Aircel, Vodafone, Idea were operating with GSM (Global System for Mobiles) technology whereas TATA and Reliance were operating with CDMA (Code Division Multiple Access) technology. Globally, GSM is more prevalent than CDMA. GSM originated from an industry consortium whereas CDMA technology is largely owned by chipmaker Qualcomm. This made it less expensive for third parties to build GSM equipment. GSM adoption spread rapidly also because in 1987, Europe mandated the technology by law. Since 2006 itself, Reliance’s Anil Ambani was seeking permission for GSM in addition to CDMA. The existing GSM providers including Airtel’s Sunil Mittal were indirectly but belligerently intent on disallowing this demand from the CDMA operators. The GSM operators ganged up to form COAI (Cellular Operators Association of India) while the CDMA operators formed AUSPI (Association of Unified Telecom Service Providers of India) in order to lobby their respective causes. The members of COAI had the upper hand and the commercial grip because of their existing shared infrastructure. The business-war between these two groups had been a chronic administrative headache for the Telecom Ministry.

On 26 April 2007 (prior to my taking charge as Telecom Minister on 16 May) a letter with a reference note was sent to TRAI requesting an updated set of holistic recommendations for wireless services. All the relevant ministry officials had approved this note of the SO (AS-II) which clearly stated, “Further processing and examination of the existing UASL applications/new UASL applications received in future will be carried out after receipt of the recommendation of TRAI.” I signed in that file eventually but had not been involved in its initiation. Consequently, in August 2007 TRAI released its 200-page report of recommendations which was published on the Telecom Ministry’s website on the 29th of that month. In his preface to this report Nripendra Mishra Chairman of TRAI quoted, “It had become essential to seriously consider the issues like ‘who should be the best judge to determine the spectrum price?’ and Rs. what is the most transparent mode of spectrum allocation?’ The Authority while making recommendations has made attempts to introduce market forces to maximum in the decision making. As a Regulator, we are concerned with maximising the welfare of the consumers, healthy growth of Telecom and financial viability of Telecom companies.” The other core facet of TRAI’s recommendation related to the need for a Rs. level playing field’ as highlighted in the preface, “It is obvious that a lot of developments have already taken place in the sector and the Authority while accepting the legacy and level playing field has to fall back on modular building approach.” The report further stated, “In a developing economy, the regulator has not only to address the social good or consumer interests but also has to play a catalytic role in development.” The key recommendations made were:

There should be no cap on the number of access providers in any service area

Existing UAS licensees may be permitted to expand their existing networks by using alternate wireless technology i.e. a UAS licensee who is presently using GSM for wireless access may be permitted to use CDMA and vice-versa

Spectrum for the alternate technology, CDMA or GSM (as the case may be) shall be allocated subject to availability after payment of prescribed fee

BSNL and MTNL being incumbent operators shall be permitted usage of alternative technology and allocated the requisite spectrum without paying the prescribed fee

For the purpose of payment of license fee and spectrum charges, the stream wise revenue of different technologies shall be considered

Enhanced Subscriber linked criteria for spectrum allocation

THESE recommendations were discussed and unanimously accepted by the Telecom Commission headed by the Telecom Secretary. Nripendra Mishra had also his considerable experience as Telecom Secretary in DoT during the period of 2004-2006. The consultation paper floated by him earlier as Chairman, TRAI to finalise the recommendations and subsequent vast deliberations thereon with various stakeholders were commendable both technically and scientifically. Inspite of the political change in the entity of Central Government, he has been accommodated as the Principal Secretary to the PM Narendra Modi. However, TRAI’s recommended figures were not agreeable to COAL. They argued that the technical factors and data that TRAI had relied on were faulty and partisan in nature, resulting in very high subscriber base criteria which would lead to losses for them. COAI’s other major bugbear was dual technology licensing which the government had enabled through UASL. In 2006, when Dayanidhi Maran was the Telecom Minister, the Reliance Group, which already had CDMA, applied for permission to operate GSM, and their application was considered for the grant of consent and allotment of GSM spectrum. Legally, once UASL had been implemented, there should have been no impediment to a licensee for operating these two technologies simultaneously. However, possibly in order to have a statutory safeguard, Dayanidhi Maran referred this to TRAI for their recommendation. TRAI in their latest recommendation had re-affirmed that technological neutrality is inherent in UASL and accepted granting the permission to CDMA operators for GSM also, upon collection of an additional entry fee of Z1650 crore (the prevailing fee for a new licensee). However, COAL remained firm that dual technology should not be permitted. They had apprehensions about the competition and threat to their business as existing CDMA operators (like Reliance or TATA) could start their (GSM) operation immediately upon being allotted the spectrum since they had adequate infrastructure and technical facilities all across the country. So, they tried by all means to keep the government policy favourable to them and avoid the threat of competition even though it would quite naturally have benefited the public.

After posting of the TRAI report on the government websites, officials of different wings of the Telecom Ministry separately started their proceedings for submission to the Telecom Commission. Alongside this process, debates were raging in the media and a number of letters were being received in this context, addressed to me or to the PM. Some letters were from COAL and AUSPI but additionally others were from MPs and leaders like Chandrababu Naidu and Amar Singh. Their views either supported or opposed one or the other between the COAL and the AUSPI. Without malice towards the MPs/leaders, I must opine that the content and motivation for these letters was provided to them by representative of one or more of the constituent telecom companies. The heads of these companies also started calling on me which started getting prominent mention in the news. Anil Ambani and Ratan Tata of AUSPI as well as T.V. Ramachandran and Sunil Mittal the key executives at COAL came to meet me to discuss plans for the future of Wireless Telecom in India.

A Karthi Chidambaram who is an acquaintance called me up one day during the middle of September 2007 and told me that his friend Sunil Mittal (of Airtel) urgently wanted to speak with me that very day, since he was going abroad later in the night. I was having dinner at ‘Tamil Nadu House’ in Delhi, with a senior Minister of the DMK who was on an official visit when the call came. The social and industry standing of Mittal, the substantial share of COAI in the Telecom sector and Karthi Chidambaram’s recommendation made me agree to meet him at 10:30 pm in my camp office. At this meeting, Mittal said that the TRAI recommendations did not give adequate protection to foreign investors who had invested in their Indian partner companies using GSM and also did not ensure provision of additional spectrum for their future expansion. He argued that foreign companies had invested several thousand crores in their Indian telecom partners with an eye on future returns and that allowing new players to enter the scene would be detrimental to them and the overall health of the telecom sector in India. He complained that TRAI’s recommendations were against the growth of the GSM providers but were in favour of the CDMA providers. He stated that TRAI had not weighed appropriate scientific and technological considerations while recommending the ‘subscriber linked criteria’ for additional spectrum allocation. He boasted of his position of influence in the telecom sector as also his personal political clout. He claimed that COAI was used for very cordial relations with all my predecessors in the ministry and he expected “similar cooperation” from me as well which seemed to me extreme my contemptuous and cynical. I urged him to take a broader perspective saying, “At the same time when considering your contribution, investment, and the future interest of the Indian telecom sector, the Government cannot ignore the recommendations of TRAI. So, please extend your cooperation to the Government to resolve the situation amicably and ensure a level playing field.”

Refferring repeatedly to his business acumen, considerable resources and political influence, Mittal kept trying to emphasise his apprehension that the ministry may yield to his competitors and wrongly dilute his position even if the move had the premise of being legally and procedurally valid. He was perhaps attempting to alert me from being misled and convinced by others, or perhaps he was attempting to coax me before someone else could. I was keen on ensuring an environment conducive to the amicable enforcement of TRAI’s recommendations, so I continued the dialogue. “Do you fear that somebody will buy me? Let me assure you that there might be a price for me but I don’t think there is anybody in this world rich enough to pay it.” This got Mittal on the defensive and he denied any intention of implying that. He reiterated his comment about cordial relationship with the ministry and concluded that, “they were prepared for any kind of cordial relationship.” The underlying allusion seemed easy to comprehend and I made it clear to Mittal that I was not for such one-sided cordiality when what was needed was an objective and neutral atmosphere for the good of the nation. He took leave saying, “Let me come back to you after discussing with the other companies. Please do not take any decision until then. Let me meet you after my return from my foreign tour.” I agreed to this. Contrary to my expectation and his earlier assurance Mittal did not follow-through on his promise of a subsequent meeting. I briefed the PM about this meeting with Mittal as well as Karthi Chidambaram’s role in arranging it and ensured that he understood the tenor of this key stake holder and industry leader. In the same month, Anil Ambani of Reliance also met with me to speak on behalf of AUSPI. He sought permission for GSM in addition to CDMA and placed AUSPI’s point of view that the members of COAI should not continue to be granted additional spectrum beyond 4.4 MHz at no cost. This irreconcilable difference between the two groups of Telecom providers was well known to the PM and also to senior ministers like Pranab Mukherjee, H.R. Bhardwaj and P. Chidambaram. I mention these names specifically because they had a role to play in the 2G saga.

Anil Ambani and Ratan Tata had further meetings with me along with executives of their companies to discuss the way forward. They did not oppose the TRAI report or push any alternative suggestions but only stressed that the recommendations should not be diluted. Since the Telecom Ministry had already accepted TRAI’s recommendations on subscriber base criteria, I went ahead and gave my approval to it on 18 October 2007 — which was also reported in the media. To my disappointment, COAT, which was determined to stall the course of these recommendations, wrote more than 10 letters of grievance to the Telecom Ministry. Then on 23 October 2007 they filed a case with TDSAT without any advance notice or specific discussion with my office in spite of all the earlier assurances of attempting to work collaboratively. The media got more fodder for sensationalism in the pre-existing context of the animosity between COAT and AUSPI.

At this point, Farid whom I had met a couple of times along with Sam Pitroda regarding some new technology, requested me to grant yet another appointment to Sunil Mittal and his brother Rajan Mittal as they wanted to meet me to find some amicable solution. I was puzzled by what their reason for meeting me now might be after having already filed a case with TDSAT. However, in order to try and make some progress, I agreed to meet with them. Even during that meeting which took place in the end of October 2007, Sunil Mittal was insistent that TRAI’s recommendations must be scaled back — in fact he demanded the subscriber base criteria should be halved — and that dual (GSM and CDMA) technology should not be permitted.

I : “How can I as a Minister reject a report of TRAI based on scientific facts without any basis? Either the recommendations must be sent back to the Authority or must be reviewed through due process. Then the base criteria could be reduced if it is deemed viable. Since the recommendations have already been accepted by the Department of Telecom, there is nothing I can do now.”

Mittal : “In that case, do not allot any spectrum or issue new license till the case is resolved.”

I : “When there is no stay order in the case how can I stop allocation?”

Mittal : “Is it not reason enough that the case is pending?”

I emphasised : “Even after giving additional spectrum to all your companies (COAT), considerable amount of Spectrum has been identified for new providers at this point. So, it is just not possible to suspend all this at this stage.”

I admired the confidence — even though it had shades of smug conceit — of Sunil Mittal who probably believed that the Telecom Sector’s governing bodies were obliged to pander to an industry player of his stature. I was also thinking of his breach of trust given his earlier assurance to me of a follow-up meeting.

I admired the confidence — even though it had shades of smug conceit — of Sunil Mittal who probably believed that the Telecom Sector’s governing bodies were obliged to pander to an industry player of his stature. I was also thinking of his breach of trust given his earlier assurance to me of a follow-up meeting.

THE conversation was not heading in the direction of compromise or agreement. T.V. Ramachandran, one of the Executive Officers of COAL had met with me and our department officials on several occasions before and also after my meeting with the Mittal’s. In all these meetings held either with COAL or with Sunil Mittal — who in anyway controlled COAL — their stance was either to force a change in the policy decisions of the government or to put them on hold. At no point, were they willing to concede anything or scale back their demands. This sort of bullying to try to control the workings of the government was not acceptable to me. I murmered a couplete in Thirukural

Since the Ministry had approved the TRAI recommendations, the pending application received from Reliance seeking additional Spectrum in GSM was accepted. When Reliance immediately paid the 1650 crore fee, they earned the right to get an allotment of additional 4.4 MHz spectrum. On 19 October 2007, a Press release was issued explaining in detail the Government’s decision to grant permission for dual technology. COAL put forth its arguments to TDSAT challenging this decision and claiming that the approval for dual technology was legally flawed, “In order to benefit the said one set of operators TRAI admittedly went beyond its terms and references and suo motu and without consultations made some very arbitrary and ad hoc recommendations … DoT thus has acted with undue and seemly haste in a bid to advantaging one set of operators over the others, thus denying equal opportunity and level playing field to GSM operators.” Clearly the corporate war that I alluded to earlier is not my exaggeration but is something that COAI referenced openly.

As I have already explained, the Telecom landscape in India has attempted to take major strides since the early 1990s in order to bridge the gap with the developed world. Needless to say, every stakeholder in the ecosystem has had to learn and adjust according to circumstances. Differences of opinion and legal disputes have plagued the course even as the technologies, business/operating models, government policies, regulatory framework and official procedures have matured. For example, even at the time of the first telecom bids in 1992 the rejected bidders had appealed to the Courts for what they claimed was an unclear and arbitrary selection process. This litigation (although rejected by the Supreme Court) delayed the rollout by 3 years. In the following auction, a single provider had the highest bid in 9 circles and the government was forced to intervene by making the provider choose 3 circles as it was certain that the company would be hard pressed to shore up the finances to pay license fees for 9 circles. Similarly, there have been instances when the government has taken steps to either reach an amicable settlement with petitioners or convinced them to withdraw their cases. In the current instance of COAI’s TDSAT appeal, there was so much obstinacy and hype that a compromise solution became infeasible. When COAI’s case before TDSAT came up for hearing on 12 November 2007, Vahanvati the Solicitor General appearing on behalf of the government raised objection to the granting of a stay order and then the court adjourned the case until 12 December 2007. When a case is filed, normal procedures could be stalled while the matter is Rs. pending before the court’; and the situation could get much worse and take years to be resolved if the petitioner obtains a stayorder from the court. Hence following my direction, the Telecom Ministry’s steps were carefully orchestrated to ensure that COAL would not obtain such a stay-order. It is not unusual or unthinkable for individuals or companies to go to Court either to challenge the decision of the Government or to appeal against it. However, there must be sufficient grounds for such a challenge. The Tribunal (TDSAT) and the Delhi High Court not only upheld the actions of the Telecom Ministry but also levied a fine on COAI for filing a case without sufficient grounds.

SUNIL Mittal wrote a letter to the government dated 1 November 2007 stating, “I have been running what has been universally acknowledged as a highly efficient mobile operation under the Brand Airtel’ for the past 13 years. Despite having one of the lowest allocated spectrums amongst its worldwide peers, Airtel is not only the largest mobile operation in the country but the 10th largest operator in the world. Sir, we would not claim to be experts in our sector, but can certainly claim some degree of knowledge to challenge the absurd proposed spectrum allocation which has been put forth by TEC…. In the meanwhile, please ensure that no spectrum is allocated which may compromise the legitimate right of the existing operators.” The wording of that letter reaffirms Mittal’s sense of entitlement and his belligerent posture. He audaciously expected the government to believe that his knowledge was so superior to that of TRAI and TEC as to dub their recommendations as absurd. I also balk at what he refers to as “legitimate right”. As an erstwhile lawyer, I can only assess ‘right’ as something that has been granted by Law. The right Mittal refers to is not based on any Law; it was not granted by any policy document of the government or in any clause of the license or in the written agreement issued to his corporation. But the members of COAI had a ‘big brother’ attitude and felt they deserved special privileges. The letter made flippant remarks about policies in other countries ignoring the fact that TRAI had reviewed and discussed the methods followed by various foreign countries in its recommendation. Since COAI was not in agreement with the TRAI report on spectrum allocation, TEC made another recommendation in October 2007. I am not exaggerating when I say that this report from TEC which recommended an even greater increase in the subscriber base criteria made the COAI tremble. TEC officials explained that their report had been prepared scientifically with appropriate technical inputs. Inspite of all the due diligence and care taken by TRAI and TEC in formulating their recommendations, due to the importance of the issue and these rumblings from key stake holders I ordered the constitution of another special committee – headed by Bandyopadhyay, Additional Secretary of Telecom Department along with Dr Baskar Ramamoorthy of IIT Chennai and Dr Ajit Kumar Chaturvedi of IIT Kanpur – on 6 November 2007 to review the situation. In addition to the expert members one representative each from COAL and AUSPI were also included in the committee. As the committee proceeded with its work, COAL probably realized that their arguments would not stand the test of a methodical scientific review.

Hence, 2 weeks prior to the release of their report, COAL withdrew from the committee. Thus, COAL continued with their stand of ‘only what we say is correct and the government must accept it,’ having first alleged that TRAI’s recommendations ratified by the Telecom Commission were flawed, then calling the report of the specialized technical body (TEC) of the Telecom Department absurd, and not cooperating even with the special committee of experts, setup to redress their complaints. I could have accepted and implemented the Bandyopadhyay Committee’s report received on 18 December 2007 which made recommendations that were even less favourable (much higher counts in the subscriber base criteria) to COAL than the prior recommendations of TRAI and TEC. However, I remained objective and did not display annoyance or spite for Mittal’s behaviour towards me, for the complaint to TDSAT, or for their inflexibility even in the face of multiple cycles of methodically conducted reviews.

After deliberation with the Telecom Department officials, with this sense of balance in mind, it was decided to find an interim arrangement for implementing the Bandyopadhyay Committee Report, while continuing to engage with stakeholders to arrive at a more amicable solution. I passed an order with the following interim measures:

Spectrum would be allocated based on the TRAI recommendations dated 28 August 2007.

Additional Spectrum beyond the contractual obligation (of 6,2MHZ) would be allocated in multiples of 1 MHz as per the provider’s eligibility.

I am not so naive as to assume that industrialists and wealthy Individuals cannot influence the administration of the country and the actions of political parties. As long as they do some good to the nation this is perhaps acceptable. The situation becomes unacceptable when self-interest outweighs public-interest. This has I always been my pragmatic approach to my responsibilities as a public servant and elected representative of the common man.

I am not so naive as to assume that industrialists and wealthy Individuals cannot influence the administration of the country and the actions of political parties. As long as they do some good to the nation this is perhaps acceptable.

The cartel mentality and the battle lines between COAI and AUSPI had become very apparent to me now. ‘Only when there is Competition, the tariff would come down; and the subscriber base would increase’ is the National Telecom Policy (NTP-99). ‘If there is competition our investments may have no protection; our business margin would reduce; so, there should not be competition’ is the stand of COAI. Adherence to the National Telecom Policy was not only my duty but the underlying principle of public good was also my moral imperative. As I pondered over this and reviewed COAI’s petition to TDSAT, I couldn’t help mumbling to myself, “the cat is out of the bag.” But still I remained faithful to the lines Tamil Sangam literature, “Muraiyenappaduvathu Kannodaathu Uyir vawwal” (Rendering impartial justice lies in protection of lives) “Setramum uvagaiyum seyyathu kaakkum yemankol” (Righteousness lies in keeping balance against hatred and desire)

In the midst of all this political drama, a much more dramatic event of a very personal nature took place. On 15 September 2007, my mother passed away. Although I do not believe in religious rituals, I stayed back in our native village for a few days for the sake of my siblings. Even at the time of my father’s death when I was expected to shave my head clean as per the Hindu tradition, I was not ready for it. Similarly, after my mother died, I did not agree to perform any rituals. My rationalism asserts that there is no life after death, whereas the rest of my family believes in the afterlife. When Lord Buddha preached, “There is no soul”, He was asked, “Where does life go after death then?” His reply was in the form of a question, “Where the light goes does after a lamp is put off?” I firmly believe that ‘action’ is life and ‘inaction’ is death. I returned to my work in Delhi by the end of that month.